Asian oil markets have a lot to digest -- secondary sanctions on Russian oil, Middle Eastern tensions, trade tariffs imposed by Washington and a weakening appetite from China.
Despite that, oil trade flows have been resilient.
When hundreds of delegates, including CEOs, government officials and market experts, gather at the Asia Pacific Petroleum Conference 2025, they will be looking for answers on whether turbulent global relations and trade policies can cast a shadow over oil markets, or fast-rising oil production has the ability to cushion the impact and prevent any disruption to oil trade flows.
Scheduled to take place in Singapore from Sept. 8-11, APPEC by S&P Global Commodity Insights will also be addressing emerging trends in the oil market -- rising US crude flows to Asian countries amid the high tariffs, growing efforts by Asian refiners to diversify into petrochemicals, and oil companies adapting their strategies to thrive under tightening climate-related regulations.
Commodity Insights expects that oil markets will stay calm as the most recent developments have been factored in. Rising crude oil production, modest demand growth and a slower pace of stock building in China will lead to a greater supply surplus and bring Dated Brent prices below $60/b before the end of 2025. And in 2026, a higher inventory level and plentiful supply means prices will struggle to average above $60/b. For now, the forecast for annual average prices for Dated Brent stands at $56/b, but upside risks could push prices above $70/b.
The supply equation
On the supply side, the OPEC+ alliance continues to add significant volumes of oil. Its key members increased supply by 548,000 b/d in August. The eight key OPEC+ members announced Aug. 3 they would increase oil supply by 547,000 b/d in September. The group has already increased supply by almost 2 million b/d, on a nominal basis, since April.
The September addition would bring the total increase in nominal supply to 2.5 million b/d. Actual supply may rise by less than nominal increases to the extent that countries that have overproduced in the past may compensate through lower output. Moreover, others either cannot or may choose not to produce to their higher target levels.
As a result, Commodity Insights expects that the pace of crude oil supply growth will be much higher than demand. OPEC+ crude oil production will be nearly 2 million b/d higher in the last four months of this year compared with January. Output is also on the rise outside of OPEC+ in Brazil, Guyana and Canada. Norwegian production has risen to its highest level in a decade. However, US output is expected to soon flatten and then start to decline in early-2026.
Asian refiners have welcomed the OPEC+ decision to raise crude output. They are looking to avoid an overreliance on Middle Eastern supply, focusing on diversification to maximize refining margins and minimize logistical risks.
However, volatility in the Persian Gulf served as a stark reminder for Asian crude buyers of the critical importance of supply source diversification. The general view is that a ceasefire in the Middle East does not mean the conflict is over.
The tariff dilemma
US economic threats and tariffs have shifted the focus of Asia's oil buying road map, and APPEC delegates will be gathering insights on how Asian buyers are navigating these changes.
Several state-run oil companies in Asia are actively exploring increased purchases of US crude to offset the impact of US tariffs. However, most private-sector refiners have emphasized that refining economics will be their primary consideration in feedstock procurement, taking precedence over diplomatic factors.
To mitigate the impact of US tariffs ranging from 25% to 50%, Japan, South Korea, Indonesia, Thailand and India are pursuing diplomatic efforts to negotiate more favorable terms and preserve trade relations with the US.
In Asia, India's crude buying strategy has been in the spotlight.
In recent years, India has played a crucial role in the Asian refining landscape by actively procuring sensitive Russian crude. This strategy has inadvertently benefited other Asian refiners by reducing competition for their staple Middle Eastern sour crude. India's oil diplomacy now faces a litmus test as the US looks to penalize non-oil trade instead of directly targeting imports of Russian oil.
However, New Delhi is unlikely to step down from its stance of purchasing from the biggest non-OPEC supplier. There may be some adjustments to buying patterns, but overall flows will continue. India has given its refiners a free hand to plan crude purchases while keeping commercial viability in mind, but refiners are adopting a cautious approach and trying to strike a balance by boosting purchases from the US and other non-OPEC suppliers.
In a recent interview with Platts, part of Commodity Insights, Indian Oil Minister Hardeep Singh Puri warned that oil price inflation remains a major risk in the event of new clampdowns and that global price benchmarks could have shot up to $130/b in 2022 without the country's purchases of Russian crude.
India was the largest importer of Russian crude in 2024, with inflows reaching 1.8 million b/d. China followed at 1.24 million b/d, while Turkey was third at 300,000 b/d. India's imports of Russian oil in the first half of 2025 have also maintained a similar trend, according to data from S&P Global Commodities at Sea.
China’s demand outlook
One of the biggest focus areas for APPEC delegates will be how China's oil buying pattern might shape up. It is becoming increasingly clear that a modest pace of stock building in China would help keep the market subdued for the rest of the year.
Asia’s top oil consumer imported 11.29 million b/d of crude in January-July, rising 3.2% or 355,000 b/d from the low base of 10.94 million b/d in the same period of 2024, data released by China’s General Administration of Customs showed Aug. 7.
In the absence of any buying for its strategic petroleum reserves, Commodity Insights expects China’s crude imports to slow to about 11.05 million b/d over August-December from 11.23 million b/d in the same period of 2024. The slowdown could depress oil markets even further.
Sambit Mohanty is Asia Energy Analyst at S&P Global Commodity Insights, leading coverage for Platts Oilgram News for the Asia-Pacific region. Sambit is based in Singapore and has more than 25 years of experience as a senior journalist and editor analysing commodities and energy trends in the region. He holds a Master’s Degree in Applied Economics.
